Practical Application of cost and budgeting in a company is the way and how a company uses its capital available in the evaluation of effort put forward by the managing team and employees, materials it has, resources available in the company, working hours’ time and utilities consumed, risks in which the business is exposed to and opportunities that are available in the production and delivery of a good or service in the process of planning for future income and expenditure to act as a guideline for how to spend and save at an equitable detained level. This is necessary in a company in order for the company to maintain cash flow which if not done properly it will result to the cash flow controlling the company.
United technologies corporation (UTC) is an American multinational company. It’s located in the United Technologies building. This building is in Hartford Connecticut. This corporation was formed by combination of smaller corporations which include Hamilton Sundstrand Corporation, Chubb security, Schweitzer Aircraft Corporation, Pratt and Whitney, hawk work, carrier, corporation, clipper wind power, and Goodrich Corporation. All this are specialized in different business activities. The company was started in the 1960s, in 1974, Harry Gray became its C.E.O. At first it was called united aircraft but in 1975, the name was changed to UTC. This was done so as to reflect the intent to major in different sectors ad not only the aerospace. Its current C.E.O is Gregory Hayes.
At the moment UTC engages in researching, developing and manufacturing high technology products in many sectors including aircraft engines, helicopters, HVAC and fuel cells. Pratt and Whitney’s sector has majored in Aerospace offering products such as commercial, military, commercial jets, general aviation, aircraft engines, parts and services, industrial gas generators are sold to a variety of consumer base comprising of international and home commercial airlines, and aircraft lending companies. Aircraft manufactures and United States and foreign governments is also part of it. Pratt and Whitney also give product support and a full range of major repair and a group of vehicle management services. In addition, United Technologies Corporation offers aftermarket services for commercial and military business to general aviation customers worldwide. They are also involved in electric power generation, management and distribution systems, flight control systems, engine components, environmental control systems, fire protection and detection systems. Propeller systems, aircraft nacelles, landing and electronic systems Sikorsky mat specializes in military and commercial helicopters, aftermarket helicopter and aircraft parts and services sold to consumers in the business and residential property industries, around the world.
The corporate frame work at united technologies provides the framework for building a culture of honesty and ethical behavior everyplace it conducts its business. Board of directors are the ones who guide policies, their actions and also govern the connections between the employees consumers and the society. They have documents policies and guidelines which provide a structure for timely well-reasoned decisions. The key documents include: By laws certificate of incorporation, corporate governance guidelines, audit committee, chatter compensation, and executive development committee charter, nomination and governance committee charter, public issues review committee charter, united technologies corporation policy manual, global government relations and ethics and compliance. They also have public activities and they include participation on government and international affairs, congressional testimony and industry organizations. The company supports public policy that leads to clean energy technologies and high efficiency structures. UTC also has a political action committee (PAC) that was founded wholly by voluntary employee contributions and contributes to political candidates and organizations aligned with UTC interests.
In policy and oversight the united technologies and its employees have legitimate interests in participating in public policy formation and UTCs government relations initiatives are intended to educate and persuade officials and the public on a broad range of issues that are important to the company and its customers.
UTC faces challenges from the US federal contributions, United States government law makers make decisions that affect UTCs businesses and for this reason, UTC supports candidates or public office who understand the company’s broad objectives.
In trade associations the company participates to keep abreast of business and technical issues and emergency standards within their company and to be part of an important public education effort regarding major issues of common concern to their industry. The company consists of eleven member board of directors which the president who’s chief executive officer and ten independent member’s .Board members participate on six permanent committees: Adult nominations and governance, Compensation and executive development, executive finance and public issues review. Independent directors serve on each committee and five of the six committees consists of exclusively independent members.
In UTC there different types of payments that are made by the firm in the production of a good or service. These costs are classified in various ways including fixed costs, variable costs, average costs, total costs, and marginal costs.
Fixed costs are payments made on expenses that change in proportion to the activity of a business within the relevant period or scale of production. For example the company must pay rent and utility irrespective of sales made.
Variable costs comprise of expenses that change in relation to the activity of the corporation in a certain sector such as sales or production volume. In manufacturing, direct material costs are an example of variable costs are the prices of supplies needed to produce a product. UTC normally cater for rental and maintenance fees each period regardless of how much power gets used. Also some electrical equipment may be kept winning even in periods of low activity. These expenses are regarded as fixed but beyond this, UTC can use electricity to run plant and machinery as required. The busier the company, the more the plant will be run and so the more electricity gets used. This extra spending can therefore be regarded as variable.
Total costs is the sum of the average variables costs divided by output for example
Practice income-based budgeting-budgeting is a form of risk management and the most reliable budgets yield thee best fiscal results for the organizations are conservative and income based, base income targets on realistic expectations and only include reliable income in the budget. Never include an income project that simply fills the gap to cover expenses. This sets the organization up for a budget deficit if the organization fails to have the plugged income targets. Take care to understand the impact and timing of restricted contributions and releases on the operating budgets. Ensure expenses are lower than the dependable income total. These requires corporation among all departments in setting organizational and pragmatic primitives, timing new programs
Analyze and understand you revenue concentrations lack of diversification of revenue sources can pose a serious risk to the financial stability of an organization. You should single large revenue source become unavailable. There’s no universally right mixed of revenue source. The right mix for an organization depends on circumstances, mission, industry, staff capacity and age of organization, risk is also present if a big portion of an organization annual revenue depends on the success of a single fundraising event or yearly program event. The organization must understand the impact of cancellation of the event will have.
Confirm your budget relationship to the mission and long range strategic goals. Ensure that all strategic initiatives with budget impact are included in the budget process.an organizations budget can and should demonstrate its commitments to its mission through numbers.
The company needs to include information technology upgrades and maintenance evaluation and staff development costs in the budget. High quality programs can best sustain and grow with a well-trained and well equipped staff both program and administrative to support them. Budget for capital in addition to operations. An organization budget should take into account the organization’s annual operating income and expenses.as well as ensuring resources for long lived and non-operating needs. This is the capital budget .An organizational might cover several years and it should include target amounts and fundraising strategies to achieve financial goals.
Provide narrative notes to explain budget assumptions to the board .Board and finance committee members will appreciate explanations to help them understand no underlying thinking behind the numbers in the budget.
The budget could be brilliant, well researched and well documented but if it’s unreliable, the work will be undermined. Budgets that are easy to read and understand are well formatted.
In order for a company to grow the management should strengthen the execution infrastructure by investing in safe bets regardless of which growths strategy is selected. A firm’s infrastructure must be up to a standard that support successful execution.
Initiate a process to identify strategies with a high probability for success. Three customer strategies are recommended i) growing the core business ii) growing by sub segmenting customers and growing adjacent opportunities.
Different leaders holding different position in a company in different departments should coordinate and encourage their employees to work hard in order to increase efficiency of the business.
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